The 15 year Management contract w/ the Kaz. gov't does give KGFC/Gold Pool the rights to the gold as the mines' manager and operator. But, as you say, if that contract is unilaterally (by the KazGov. or "the Department of Management of State Property and Assets of Kazakstan") terminated, we're in trouble. This is what the gov't has attempted to do, however KGFC seems confident that the agreement cannot be so breached, and that it is completely in its legal bounds to suspend operations until the 'DMSPA' proceeds as promised, by consenting to the finalization of the privatization. It would certainly be a terrible precedent for the country of Kazakhstan, ie, as a future and eager candidate for resource investment, if the 'DMSPA' were to pull such a thing.
Note the similarities in what's happening to World Wide Minerals: ...In July[97] the Kazakstan government threatened to unilaterally cancel the management agreement if KazUran did not pay certain accrued and unpaid wage and pension benefit obligations of TGK by the end of July. KazUran took the position that it was not its obligation to make these payments as it had more than adequately complied with its financial obligations under the management agreement. World Wide Minerals believes that this threatened action is the government's way of reacting to the temporary suspension of operations at TGK.-Aug.5/97)--The rest is at:
stockhouse.com
So far, KGFC has spent ~$25mil towards the 3 mines, and will eventually need the sum of $42mil to complete the changeover to full independent operations, including the CIP* and CIL plants, $12mil of which has been conditionally pledged by Gerald Metals. -KGFC apparently does have deals/financiers lined up, albeit tentatively.
(*BTW, we still haven't seen the results of the "Kilborn SNC Lavalin engineering study for the evaluation of the CIP plant and existing flotation facility upgrade" - ?)
I'll grant you it is a scarey looking situation. Let's hope the Kaz Gov't doesn't force their silly (personal?) issues, and makes the wise, legal decision to follow though on their contract.
- They seem to be co-oping with Steppe Gold lately (Aug1/97): ...Mr Menzies also reports The company has received confirmation of its right to export gold produced from the Mizek joint venture and sell into the international market without participating in primary gold auctions in Kazakhstan. - - Actually, this type of arrangement had also been going well for KGFC: 3/27/97- Kazakstan Goldfields Corporation characterizes these regular shipments of gold as ongoing milestones and evidence that the system that the Company has in place in Kazakstan is working.
Finally, I bet if KGC had more cash on hand this would be less of a problem...
-What are your thoughts, reactions, Francis? -Anyone else?
Cheers,
-J |
